Transcript of the beginning of the meeting:

Vladimir Putin: Ladies and gentlemen, I would like to start with an issue that we discussed in Togliatti yesterday – the development of our automotive industry. As you know, acting upon the recommendation of environmental organisations, in particular Greenpeace Russia, we have decided to introduce a disposal fee, which will also be levied on imported automobiles. After creating the Customs Union and the Common Economic Space, we should coordinate such issues with colleagues in Kazakhstan and Belarus. I have spoken with the leadership in both countries today, including the presidents and the prime ministers, and they have supported our decision. The Economic Development Ministry will negotiate with our partners at the ministerial level in order to implement this decision within the framework of procedures pertaining to the Common Economic Space.

Let us start with updates. Mr Fursenko (Andrei Fursenko, Minister of Education and Science), please report on the implementation of the programme to attract leading scientists to Russian universities. We have attracted a large number of leading, world-renowned foreign scientists, including our former compatriots and foreign nationals, as part of one of our grant programmes, specifically the mega-grant one. How is this project proceeding?

Andrei Fursenko: Mr Putin, ladies and gentlemen. Ten days ago we held a meeting on so-called mega-grants to assess our performance last year. We invited several recipients of mega-grants who reported about the implementation of that project. Before we started, all projects were evaluated by international experts; they were selected upon the recommendation of Russian and foreign experts, and their implementation was evaluated likewise. Nearly all experts agree that this has been a successful project: 75 of the 77 projects were declared successful and 59 percent of them have already received funding. Experts had minor complaints about 16 projects, which are being rectified and will be resumed within days. There are serious complaints about two projects and the council has decided to put a hold on their funding until they remedy their shortcomings and its future development can be clearly assessed. In short, project evaluation was conducted rather informally. Fifty three out of 77 labs are engaged in applied research. There are already 45 small companies based on these labs. When you were in Tomsk, you visited these labs and discussed applied research with experts. The council primarily praised their projects on biotechnology and engineering. Togliatti University is conducting one project on the latter linked with man-made disasters, notably, on the performance of materials. There is a Russian scientist working in Togliatti University who returned from Japan and decided to stay there. He was a professor at a Japanese university but now he is working in Togliatti and receiving a grant.

There are very interesting projects on helicopter building and rocket engines. There are also important medical projects and two of them are being conducted in medical universities – in Nizhny Novgorod and Kuban. The first project deals with indicators of cancer cells. The second project, carried out by an Italian researcher, is on the growth of donor organs and their transplants to patients. They grew a trachea, which is a unique case. All in all, 12 similar operations were carried out in the world and now the first one is being prepared in Russia. It will be performed this year. This is a very interesting project.

The other part of these grants is used to fund the training of specialists who could then stay in universities and become instructors or go into fundamental research. Fulfilling your instructions on improving the quality of teaching and training mathematicians, Fields Medal winner Stanislav Smirnov has suggested a plan on training qualified mathematicians who could work at their own and other universities. He has created and is in charge of a lab at Leningrad University. In principle, he is also ready to engage in this programme... He is now simultaneously teaching in Switzerland but is ready to give it up and return to Leningrad University to do the training.

Following your instructions, we have also drafted proposals to continue the programme in 2013-2014 and will submit them to the government in the near future.

Vladimir Putin: Well done. Thank you.

Ms Nabiullina (addressing the Minister of Economic Development) I’d like to hear from you about the operation of special economic zones – we have more than 300 investors and residents from 24 countries there. The total scale of declared investment runs into 360 billion roubles. How does this work in practice? This investment has been declared but how much has been already invested and may be invested in the near future?

Elvira Nabiullina: Maybe I will start with an event that exemplifies the development of such zones. Yesterday I visited the industrial production zone Alabuga. Rockwool, a major Danish company, has started working there. It is a leading producer of modern construction materials, in particular, mineral rock wool. They have opened in this zone one of the world’s biggest enterprises on its production. Rock wool is used for thermal insulation and saves at least 30% of heat. This is linked with our programme on energy efficiency. We can reduce utility payments by using such modern technology. By the way, they have asked us to adopt upgraded building codes and regulations that will allow them to use this technology.

Alabuga is a successful industrial production zone. We have 25 zones all in all – four deal with industrial production, another four are engaged in technology development, three are ports and the remaining 13 are designed for tourism and recreation. Indeed, 301 investors are residents of these zones and they declared their intention to invest 360 billion roubles for the entire period under review.

Out of these investors, 73 came in 2011 and declared 95 roubles worth of investment. Now private investment has already reached 60 billion roubles and 8,000 jobs have been created throughout the country. This primarily applies to the zones decisions on which were made in 2007-208. They are starting to reach their design capacity.

Recently we made decisions on the Togliatti zone. Yesterday we saw what is being done there. They have received technical specifications and are designing the zone. It already has four residents that are simultaneously starting to design and build their enterprises. We want to see in this zone not only producers of car parts that will work with AvtoVAZ but also other manufacturers in order to diversify the economy of Togliatti.

We are also working on the Sverdlovsk zone. We have a titanium valley there. New plants began to be commissioned there last year. Four plants opened in Lipetsk and small innovation companies and labs are put into operation in technology development zones. Labs are often established with foreign participation. I’d like to note a joint lab with the American pharmaceutical company Pfizer in our zone in St Petersburg and a joint venture of Nokia Siemens Networks with Micran in Tomsk. These are high-tech companies.

A number of events are scheduled for May. We are going to open a new enterprise of the French company Air Liquide. It will be engaged in high-tech production of industrial gases. Also in May, Yokohama, a major Japanese company, will launch the production of car tires in the Lipetsk Region. New enterprises are being set up for this purpose. Our goal is to reach the design capacity of our zones and speed up work on those zones on which we took a decision not so long ago. We hope that 2012 will be a dynamic year. 

Vladimir Putin: Good, okay. By the way, our colleagues are interested in what will happen with car duties. You know what I’m talking about. In case of…

Elvira Nabiullina: Of reduction…

Vladimir Putin: … reduction, and they are worried about the introduction of the disposal fee. Please regulate this issue so as to prevent anyone from sustaining losses.

Elvira Nabiullina: All right.

Vladimir Putin: I’m also talking about these new fees. I think this is a technical issue. It can be considered and resolved.

Elvira Nabiullina: All right.

Vladimir Putin: This is the first point. And now the second one. I have confirmed to our colleagues that we are introducing a rule according to which all cars that we will buy for government and municipal needs with budget money must be produced on the territory of the Common Economic Space, that is, in Russia, Belarus and Kazakhstan. You will have to talk this over with them, too.

Elvira Nabiulina: In other words, we are creating a common car market, which means that all regulations and rules must be very similar or identical.

Vladimir Putin: Absolutely. Thank you.

Ms Golikova, we have agreed to eliminate the waiting lists for rehabilitation equipment for people with disabilities and allocated 23.5 billion roubles for this purpose. How is it going now?

Tatyana Golikova: Mr Putin, these funds were allocated in 2011 and we added another 7.8 billion roubles to them so that they could be transferred to 2012 in line with the time periods you established. At the close of the first quarter of this year, these waiting lists were shut down.

Let me remind you that responsibility for the provision of rehabilitation equipment lies with the Social Insurance Fund and the regions that have been charged with such responsibility.  We are now covering nearly 100% of needs. We are slightly below the target – by 0.5 percent to 1.5 percent – only in five regions, which is mostly due to the time it takes to manufacture custom-made endoprostheses and schedule high-tech surgeries, properly train seeing-eye dogs and manufacture other types of customised rehab equipment.

Also in compliance with your instruction, we have drafted guidelines for territorial branches of the Social Insurance Fund that are procuring rehab equipment for people with disabilities to ensure acquisition of high-quality equipment. The guidelines have been prepared and agreed with the Antimonopoly Service, manufacturers and the Russian Society of People with Disabilities. All equipment purchases in 2012 will be based on these guidelines.

As I mentioned earlier at one of our meetings, these guidelines were enacted and became a government regulation – you signed this document in late February – seeking to improve the provision of people with disabilities with quality rehab equipment. In 2012, we will be buying wheelchairs from two manufacturers: Otto Bock with production facilities located at AvtoVAZ and one small Russian manufacturer making about 2,000 wheelchairs a year. Otto Bock made 10,000 wheelchairs in 2011 and plans to boost its yearly production to 40,000 by 2014.

Vladimir Putin: Is that the one based at AvtoVAZ?

Tatyana Golikova: Yes.

Vladimir Putin: How many wheelchairs a year do we need?

Tatyana Golikova: I can’t give you an accurate number, but 12,000 wheelchairs that we are getting from Otto Bock and the other plant cover about 40% of our needs. However, we don’t have a complete list of needy cases and their numbers keep growing. As I said, Otto Bock plans to make 40,000 wheelchairs by 2014 and use 78% of locally-made parts by then.

Vladimir Putin: Will these 40,000 meet the domestic demand?

Tatyana Golikova: We believe they will. If things keep moving as they did in 2011, we will resolve this issue entirely. Importantly, our goal is to make sure that the regions keep up the good work that they did in 2011 – early 2012. We are monitoring their work. Recently, we have held a conference call on this issue and things look good so far.

Vladimir Putin: Good. Mr Avdeyev (addressing the Minister of Culture), we have our traditional Easter Festival this year. How are preparations going? Do you need any help with it?

Alexander Avdeyev: Mr Putin, this is our 11^th festival organised by Valery Gergiyev. It’s one of Russia’s major festivals, which begins during the Holy Week, Easter, and lasts until Victory Day in May. There are many memorable events and dates associated with Victory Day, and concerts draw large crowds. The festival includes over 150 symphonic music concerts in 50 Russian cities, and chorus music concerts by secular and church performers in 30 cities.

Bell ringer performances at 33 churches in Moscow and the Moscow Region will be included in the festival for the first time this year.

It’s a major event, and we had proper funding this year. As usual, Mr Gergiyev is at his best as a manager devoted to this festival. This is a remarkable cultural event to celebrate the spring, Easter and Victory Day.

Vladimir Putin: Good. I urge everyone to go to the Easter Festival. You’ve been to the Museum Night already, now let’s go to this festival. There are many beautiful, exciting and uplifting events included in its programme.

Mr Popov (Anatoly Popov, Deputy Minister of Regional Development), we have on many occasions discussed the need to distribute utilities bills payments in a more uniform and fair manner. Whenever I speak with people, they always tell me that individual payers often have to pay unfair amounts of shared utility costs. This is my first point.

My second point is about heating tariffs, which used to be the same during the heating season and in summer. I asked your ministry to prepare a corresponding decision. The government resolution has been passed, so please update us on the new procedure.

Anatoly Popov: Mr Putin and members of the Government Presidium, you have absolutely correctly identified the shortcomings in the utility tariffs set forth in Resolution 306 in 2006. Customers have good reasons to believe that the shared utility billing is unfair. This has to do with the fact that such shared payments were distributed only among households with individual metering devices.

Vladimir Putin: Meters.

Anatoly Popov: Yes.

Vladimir Putin: In other words, the ones who installed meters covered all the costs.

Anatoly Popov: Yes, exactly. This issue was settled when you signed Resolution 258 on March 28. Tariffs are now divided into two parts: individual consumption and shared household consumption, which will be pro-rated among all house residents based on the size of their flats. Importantly, the total amount of shared payments remains unchanged but it will be distributed in a more transparent and fair way.

The next issue that you raised concerns what is known as the 13^th utility bill. It’s also covered by this resolution and, unlike previously, now applies only to the heating season. That way, customers will pay only for actual consumption.

There is another important issue that is addressed by this resolution. Previously, if a meter went out of order or if a customer failed to provide meter readings, suppliers could charge arbitrary amounts for their services. However, now they can bill only within the established rates. Another issue that is being addressed in this resolution has to do with paying utility bills by instalments if billing amounts are up as compared with the same period last year. These are the main issues.

Vladimir Putin: I would like to add that this resolution sets fixed rates for at least three years.

Anatoly Popov: Yes.

Vladimir Putin: Good. Thank you very much. I will follow up on this and see how this resolution works in reality.

With regard to today’s agenda, the first item has to do with the Kaliningrad Region.

As you are aware, Russia and Poland signed an international legal agreement at the end of last year streamlining travel and visa regulations for residents of border areas in both countries. Once it is ratified, the Kaliningrad Region residents will be able to travel to neighbouring Poland’s regions using special multi-entry permits. There will be no need for special invitations. As you may be aware, the agreement on local border traffic between Poland and Russia was signed in Moscow in December 2011 based on the executive order of the Russian government.

The agreement focuses specifically on the area covered by new rules. I would like to note that the Polish and the Russian sides have worked together to expand the 30-km limits established by EU regulations to include the entire Kaliningrad Region in Russia and a similar area in Poland. We proposed to sign a similar agreement with Lithuania, but, unfortunately, it refused to create a convenient travel environment for citizens of our respective countries. I believe that cancellation of visa regulations between Russia and the European Union is necessary, and we will continue moving toward this goal together with our European colleagues.

Another item on the agenda that I would like to mention has to do with our plans to introduce extensive use of modern information and communication practices at our government agencies – to promote the establishment of electronic government. A great deal has already been accomplished as regards provision of government services online. As was mentioned at one of our previous meetings, Russia ranked 27^th in the relevant international ranking compiled by the United Nations in 2011. We moved up 32 points in a matter of one year alone. This is indeed good progress. Russia leads the Eastern Europe in this respect. To compare, take a look at our BRICS partners with Brazil in the 59^th place, China 78^th, South Africa 101^st and India 125^th. So, we achieved good results.

At the same time, there are some problems as well. Each ministry and department have their own ideas regarding the computerisation of their work. Some do well, some are lagging behind, which is mostly due to lack of clear standardised rules and lack of coordination between such ministries and departments. Unfortunately, the work of electronic government is compromised as a result.

I would like to emphasise that we need a modern information and communication environment for our administrative, including government, agencies and society, an effective system of interdepartmental communication that will rid us of excessive paperwork and red tape. I would like to ask the Ministry of Communications to prepare proposals on introducing common algorithms for computerisation of our ministries and departments within the next month and provide a performance evaluation system for each particular department within the next two months.

In closing, I would like to raise a purely economic question about measures to improve the Russian insurance market and the investment climate and to promote competition in this crucial segment of the financial market. Minimal authorised capital requirements for insurers were increased in Russia on January 1, 2012. This measure is supposed to increase the financial stability of insurance companies and, therefore, provide better protection to policyholders. According to the Federal Financial Markets Service, 31% of insurers fell short of this requirement as of December 31, 2011, and the aggregate authorised capital deficit exceeded 20 billion roubles.

Therefore, it has been proposed to adopt a decision whereby foreign quotas in the capitals of our insurance companies be allowed to increase to 50 percent from the current 25 percent, to help Russian insurance companies replenish their resources.

Let’s get down to work.